What Does 2016 Hold for TalkTalk?
It’s going to be a huge year for the telecommunications industry. Moreso than any year in recent memory, these next 12 months will likely completely reshape the industry. From BT’s imminent takeover of EE, Three’s attempted purchase of O2, Sky’s launching of a mobile network and Vodafone’s potential purchase of Virgin Media owner Liberty Global, there’s huge change afoot. Those titanic moves, however, won’t overshadow what’s going on TalkTalk.
2015 was a year that will live long in the memory of TalkTalk executives, and not for a good reason. Steady growth throughout the year came to a crashing halt when the details of a devastating hack broke and cast the future of the company in a desperate light.
The story begun in October, when TalkTalk experienced what they called a “significant and sustained” cyber-attack, during which both personal and banking details of up to four million customers had been accessed. Naturally, the press were quick to pay attention, especially once TalkTalk announced that a ransom had also been sent, specifying 80,000 bitcoin to be paid, valued at around £17 million. However, some customers were already complaining that their bank details had been accessed. Indeed those same customers claimed that their details had been accessed even before TalkTalk had announced that a hack had taken place.
That reveal caught the attention of the Government, who launched an investigation into the attack shortly thereafter, with the Chair of the Home Affairs Select Committee saying that “Suggestions that TalkTalk has covered up both the scale and duration of this attack … must be thoroughly investigated.”
Shortly thereafter, TalkTalk were able to confirm on the 24th of October that a significantly smaller number of customers had been affected by the hack than previously thought. In total, 156,959 were affected by the hack, and 15,656 sort codes and bank account numbers had been taken. It was at this time that TalkTalk revealed that the data had not been encrypted on their end, so all the hackers needed was access to the servers in order to steal the information.
From there, TalkTalk entered damage limitation mode, manning the 0844 800 3124 customer service number for TalkTalk and handling unprecedented numbers of customer cancellations. In a bid to stem the tide, TalkTalk have been offering compensation in the form of free upgrades to existing customers. Those upgrades have included things like free Sky Sports, a free SIM card with 100 minutes, 250 texts and 250MB of monthly allowance for 12 months.
Presently, TalkTalk stock is at a low not seen since May 2013 and down almost 50% from the all-time high witnessed in May 2015. It paints something of a grim picture, and with the multitude of telecommunications companies merging throughout 2016, it makes the potential of TalkTalk being purchased this year highly likely.
For a company like Virgin Media, which is looking to take on Sky’s dominance (and may soon have a new owner in the extremely wealthy Vodafone), TalkTalk makes an attractive purchase. It can be bought at a relatively low price, has a strong customer base and could easily be rebranded or folded in to their current business.
Whether that ultimately turns out to be the case, that’s a matter for the future, but don’t be surprised if TalkTalk doesn’t resemble itself by this time next year.